Maharashtra Wants 1% Extra on GST

MUMBAI, 27th JULY 2016: The state government of Maharashtra urged Central Government to levy 1 % additional tax along with the GST to help manufacturing states make up for their revenue loss.

The Devendra Fadnavis led Maharashtra government wants the Central Government to keep in mind the loss in local body tax (LBT), while providing compensation for five years since the launch of GST.

According to the Maharashtra government, the state’s manufacturing sector is growing at an average rate of 6.2 per cent, contributing 21.3 per cent to the gross state domestic product.

LBT is currently levied by 25 municipal corporations across the state, while Brihan Mumbai Municipal Corporation recovers the Octroi duty. The government has estimated that with the shift to the GST regime, the loss on account of LBT and octroi duty will be Rs 14,000 crore.

Another official referred to the present state of finances saying that Maharashtra has a public debt of Rs 3.5 lakh crore and the revenue deficit is estimated at Rs 3,644 crore by the end of 2016-17. The state government’s outgo towards salary, wages and pension was Rs 93,367 crore in 2015-16. It will have to bear an additional burden of Rs 21,500 crore for the implementation of the 7th Pay Commission recommendations.

Maharashtra’s demand for additional tax on top of GST comes at a time when the Centre has been trying hard to get the crucial GST Bill passed in the Rajya Sabha. Also, the main Opposition party at the Centre, the Congress, has been demanding that the overall GST rate be capped at 18 per cent and the proposal of additional one per cent tax to compensate manufacturing states be scrapped.

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